The Osaka prefectural police and the Securities and Exchange Surveillance Commission suspect that the president of Union Holdings, listed on the Second Section of the Tokyo Stock Exchange, and eight speculative traders have been involved in the alleged manipulation of its stock prices, which would constitute a violation of the Financial Instruments and Exchange Law, sources close to the investigation said.

The 53-year-old president of the holding company and the eight speculative traders, including the president of a Tokyo investment firm and a former employee of an Osaka brokerage house, conspired to place a large volume of buy and sell orders at the same time for shares of the Tokyo-based holding company in April 2007 to make trading in the stock look active, the sources said.

Union Holdings' share price hovered around 130 yen per share in early March in 2007 but spurted to nearly 180 yen by the end of April. The price tumbled to the 50 yen level in December 2007.

The police and the securities watchdog suspect the president and the speculators had earned a profit by unloading their holdings of Union Holdings shares after their prices surged, the sources said.

Union Holdings owns Union Optical Co., a precision instruments maker in Tokyo. Union Optical has been in the red in recent years.